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Marsh substitute a bow to Payday lenders

By Bill Britt
Alabama Political Reporters

MONTGOMERY—Senate Bill 449 was a bill introduced by President Pro Tem Del Marsh (R-Anniston) was promoted as reforming payday lending in Alabama.

However, it is believed that Marsh is set to introduce a substitute to SB449 that favors the payday lenders and guts Marsh’s promised reforms.

Marsh, had said that SB449, would prohibit borrowers from taking out more than six loans per year. The substitute to be introduced will increase this to 12 times within a year. This is even beyond what the Payday lenders had requested in committee.

If an individual borrowers $350 and rolls it over 12 times (as most borrowers only take out “new loans” to extend the repayment period), they will pay over $700 in fees alone.
The bill first proposed by Marsh would have capped at fees at 12.5 percent Marsh introduced or around 300 percent APR. The substitute to be introduced by Marsh will keep fees at the current 17.5 percent of the amount borrowed about 456 percent APR.

When Marsh introduced the original SB449 State Banking Superintendent John Harrison was quoted in AL.COM as saying, “consumers will be ‘well-served’ by the legislation.” Harrison is also quoted as saying, “If not for Senator Marsh’s renewed interest in reforming this industry, yet another year would have passed without any action.”

The only thing item of Marsh’s original bill that remains constant is the requirement for a universal database under the purview of the Banking Department.

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“Payday lending reform was originally introduced this session by Senator Keahey. The bill enjoyed broad, bipartisan support. When Senator Marsh introduced his version, we endorsed it, even though it only lowered the interest rate slightly. As originally filed SB449 was a solid compromise that still included strong consumer protections. This new substitution seems to look nothing like either bills, and we do not support it,” said Shay Farley, Legal Director at Alabama Appleseed Center for Law and Justice.

Written By

Bill Britt is editor-in-chief at the Alabama Political Reporter and host of The Voice of Alabama Politics. You can email him at [email protected] or follow him on Twitter.


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